Founder's Trading Journal 0 Comment Good Morning: Is it time to buy the dip again or sell this recent rip? The July Employment Report came in at double the consensus indicating that the economy delivered 500,000 new jobs for the month. The market immediately went from pricing a 50 basis point rate increase to 75 for the next Fed meeting. And the stock market initially sold off on the report, with our core S&P 500 Index giving up 50 points, coming right down to our bull/bear threshold at the 5-day line. Since the market will have a True Gap down at the Open, Gap Rules will apply. Whether the crowd buys this dip or follows through to the downside will tell us a lot about next week’s direction. Though we got off to a rocky start yesterday in the Trading Room (breaking even for the morning), we ended up with 24 points of gain per contract. The S&P 500 pinned at the 4150 level for most of the day – creating a lot of chop. The Swing Strategy is in cash for now, and we will reevaluate depending on how the day turns out. The DEM range for today is forecast at +/- 35 points, giving us a range from 4120 to 4190. We are opening with a True Gap down right above the lower end of the range. Support lies at 4105 and 4075, with resistance at 4135 and then 4155. If the market continues south on the report today, the WEM low at 4050 would be the guard rail on the downside where dealers will step in to aggressively defend the price. Join me on YouTube Sunday night at 6:00 PM EST – there will be a lot to cover. Have a great weekend! A.F. Thornton Click to Learn More About Navigator™ Trading Subscriptions Share with Friends and FamilyWord of mouth is crucial for growing our trading community and providing education and support for your trading decisions. Please feel free to share this with your friends and family if you find the information beneficial. Facebook Twitter Email LinkedIn
Founder's Trading Journal Morning Notes – 8/4/2022 Aug 4, 2022 AF Thornton 0 Comment Good Morning:I don’t have many complaints these days as the market generally is marching forward per the daily and weekly forecasts.Our swing traders took another long position in September’s Monthly ATM SPY calls yesterday when the futures hit 4111.75.We sold half the position to finance our break-even stop and the other half at the close when the futures reached 4161, just short of our 4162 resistance/target from yesterday morning.We are in the Trading Room today for the first few hours. I would like to get positioned to ride the market into the stops above the swing highs from June, which should start just above 4189.It all depends on how much fuel is left in the tank. The market has been melting up in a short/Gamma squeeze, and the angle is not sustainable for much longer.Overnight traders pushed above yesterday’s high but could not keep the price there. So we are opening in the upper third of yesterday’s range.The DEM range today is 4120 to 4190, and the top of the WEM range is 4215.We will encounter resistance at 4175 and 4200, with support at 4135 and 4120.Global events remain a wildcard. Use stops.Consider joining us in the Trading Room today.A.F. Thornton lately
Founder's Trading Journal Morning Notes – 8/3/2022 Aug 3, 2022 AF Thornton 0 Comment Good Morning:The DEM today is 4057-4131, which is inside the WEM from 4050-4215.We are still bullish against a close below the 5-day EMA (4095) and our proprietary Algo trigger (4068).The initial target is 4180, with resistance first at 4120, and then 4150. 4120 is the Point of Control, which is the highest volume node (hurdle) in the sandbox and the center of balance for the last 20-days.Support comes in at 4095, then 4067, and finally 4050.In total, we captured 73 points on two call positions in the Trading Room yesterday.Of course. we don’t make the same amount on calls as futures, and some volatility compression further muted the gains. But the strategy was a conservative approach to the day, given the Pelosi/China thing and three Fed Speakers.Notably, and as I predicted yesterday morning, Fed speakers put the kibosh on a Fed interest rate pivot anytime soon. The market rolled over in response and closed on the lows.While the initial push from yesterday’s morning lows involved plenty of short-covering, the market continues to behave bullishly.Overnight activity is positive – but allow for some profit-taking (selling) at the open from the overnight crowd. But we are still in the lower half of the WEM range for positions into Friday’s close.There is no opening trade today, and we get some economic reports 30-minutes after the open, with another Fed governor speaking 30-minutes after that. It might be better to let the first hour pass before taking trades.When you look at the ES chart pattern symmetrically, the right side of the daily chart could look like the left side, where the market went sideways for 7-8 sessions.Have a great day!A.F. Thornton
Founder's Trading Journal Morning Notes – 8/2/2022 Aug 2, 2022 AF Thornton 0 Comment Good Morning:Time being in such short supply, I must rely on the live morning show and the recording to keep this public blog updated.I will be in the Trading Room today if you want to join us.Global events loom large. The Orwell Administration appears to be making the same mistake with China that they made with Russia. I do not believe China is bluffing on the Pelosi visit to Taiwan any more than I thought Russia was bluffing about Ukraine.Either President Orwell has not learned anything, or we are being dragged into World War III purposely because it serves the interests of the Global Elite.Nothing is scarier than having the Chinese, European, and U.S. economies on the brink, with our rulers needing a distraction (like war) to take our focus in another direction. History is replete with such precedents.And it is not advisable to assume that China’s reaction will be immediate.If it were not for global events, today’s strategy would be to get positioned around the 5-day line for a final rally leg up to 4200.The 5-EMA normally would be a short-term stop and buy point. The line sits at 4085 or so, just above the overnight low at 4083.50. Also, recall that the WEM low is 4098, so the entry point is in the Green-Green Zone.Options and Gamma levels frame the price action with the Call Wall at 4200 and Zero Gamma at 4100. So we are at a critical level based on how the market priced options this week. We should end the week on Friday’s close at or above this level.In short, this is a low risk to stop entry level. That is what we will be discussing in the room today.Let’s see how it goes. If you are serious about trading, I encourage you to sign up for the Trading Room. We will raise the price soon, and we will never raise it for you once you are signed up.A.F. Thornton Click to Learn More About Navigator™ Trading Subscriptions Share with Friends and FamilyWord of mouth is crucial for growing our trading community and providing education and support for your trading decisions. Please feel free to share this with your friends and family if you find the information beneficial. Facebook Twitter Email LinkedIn
Founder's Trading Journal Morning Notes – 8/1/2022 Aug 1, 2022 AF Thornton 0 Comment Good Morning: It is hard to believe that it is already August. Last night’s live program video covers the week ahead in detail – it is worth your time to review it. The Weekly Expected Move sandbox this week is 4050-4215, with today’s Expected Move forecast between 4098 and 4170. 4180 is the major high-volume node to conquer this week and hence. The 4200ish level is the real test. We ended Friday on an emotional spike. Accordingly, Spike Rules apply this morning, and it looks negative, at least for the Open. I would place the Spike base at 4123.50. Overnight inventory is net short. Again, if there is no profit-taking/inventory correction (buying) at the Open, that might be a slight negative. Watch roundies and half-roundies for support and resistance, as usual. It is good to remind ourselves, as it is easy to forget these most basic levels in the heat of battle. Overnight trading brought us just below Friday’s halfback at 4111, where the price has hovered all night. In addition to applying Spike Rules, the market will open with an orthodox Gap lower, and it does not hurt to use Gap Rules loosely, though the gap is not a True Gap. Of significant interest is the 100-week line, which often caps a bear market rally, as does the 50% retracement. These levels hover between 4125 and 4185. And there are additional “X Marks the Spot” resistance lines nearby (top of the bear channel, 89-week line, etc.). Data from the OCC confirms that the major option flows from last week were long index calls, along with a general pickup in equity puts/calls. A pickup in calls is a welcome sign as call positions practically became extinct in June and July. Index call buying Friday (and last week generally) was some of the largest shown by the OCC since March ’20. The Call Wall moves up to 4200 (420/4200 in SPX), now the top end of the trading range. But the buying last week was clearly emotional, volume was somewhat summer-like and lackluster, and it left poor structure under the market all the way down to 4000, the new Put Wall. Our volatility estimate does not see the Call Wall level(s) in play for today’s session – but keep an eye out for a swift liquidation break. Stops are critical. There will be resistance at 4150-4160(SPY415). Support lies at 4100, then 4079. Opening this far into Friday’s range likely leads to chop for the first few hours so keep that in mind. The Call Wall moving from 4100 Friday to 4200 this morning was impressive. While markets may now consolidate some of last week’s 4% gains, the build in call positions should help dampen volatility. In other words, larger call positions (while the price stays above the Volatility Trigger at 3995) suggest the market is more likely to consolidate than crash. Generally, the market will now tend toward mean-reversion rather than breakout volatility as long as the price stays positive above the 4000 Put Wall. And given that July was an inside candle, it suggests a more balanced environment as we consolidate gains. The bottom line – I expect the market to try to test resistance around the 4200 level sometime later this week. If the price cannot move through that area, representing the June highs and the 50% retracement of the entire bear market from the January highs, then the bear market could resume after the market consolidates into mid-August. The last seven bear markets could not overcome the equivalent 50% level at this analogous time, so 4200ish is extremely important for the bulls to conquer. There is enough FOMO and sideline cash to take the level easily. It all depends on the conviction and quantity of sellers, if any, waiting to pounce. They had not shown up as of last Friday. And the bulls are fighting the Fed with a lot of wishful thinking. In my view, the Fed will not take kindly to a new bull market. I will maintain a slightly bullish short-term bias, as long as the market stays above the Volatility Trigger and Put Wall at 3995-4000. Otherwise, when in doubt the intermediate trend favors the bears. And then there is Pelosi visiting Taiwan… A.F. Thornton